Full US recovery 'will take time': Fed official

New York (AFP) –


A full US economic recovery "will take time to complete," a top Federal Reserve official said Monday, adding that effects from the far-reaching Delta variant of Covid-19 have surfaced in recent data.

"The recovery continues to show solid momentum," John Williams, president of the Federal Reserve Bank of New York, said in a speech at the New York Economic Club.

But "the direct and indirect effects of the virus continue to shape the way we live our lives," Williams said, adding that the latest Covid resurgence "is affecting consumer spending and jobs."

Williams said the labor market still has "a long way to go" to reach the Fed's goal of maximum employment, noting that there are more than five million fewer jobs today than before the pandemic.

He reiterated the Fed's stance that US inflation should hover around two percent over the long-term, despite price effects from supply chain problems that have persisted longer than expected.

Besides modest inflation expectations, Williams said underlying pricing trends in services also suggest pricing spikes will be transient.

"I'm not seeing worrying signs of inflation yet, but it's something to watch," he said during a post-speech Q&A session.

Williams, a voter on the policy-setting Federal Open Markets Committee, indicated that stimulus could soon be scaled back, echoing the central bank's comments from last week.

While a "moderation in the pace of asset purchases may soon be warranted," the Fed's overall monetary policy "will continue to support a strong and full economic recovery," Williams said.

In a separate appearance Monday at the National Association for Business Economics, Fed board member Lael Brainard also highlighted the Delta variant's negative effects on the recovery.

But Brainard offered a broadly optimistic outlook on the economy, saying even with the downgrade to the 2021 outlook due to the Delta variant, "I anticipate that growth this year and next will be sufficient such that by the end of next year, average annual growth since the onset of the crisis should exceed pre-crisis trend growth."